-- Connecting the dots between our economy, government and business --
Summary and audio linked here.
Chicago’s political leadership is floating a pension buyout program as evidence it is seriously addressing the city’s thirty-six-billion-dollar unfunded pension liability, but Mark Glennon, founder of the Illinois policy research organization Wirepoints, said that the proposal moves debt from one column to another rather than reducing it, and that the broader fiscal picture facing the city continues to deteriorate across every measurable dimension. Audio here.
Expect no retraction or apology. This what they do.
The state’s existing buyout program for its own pensions is the precedent for Chicago, which should be a warning: Look out for similar exaggerated claims and shoddy analysis.
Full interview and summary linked here.
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Pre-bankruptcy posturing. Getting the funds INTO the pension trusts will help assure that those funds are not able to be used to pay other debts once bankruptcy is filed or simple insolvency is reached. The bondholders can’t get the money back from the pension trust (per the Detroit bankruptcy judge) so those bondholders will have to depend on whatever other resources the issuer has to pay principal and interest on the bonds. We are increasing cash collateral for the retirement system members and leaving the issuer and its taxpayers further in the hole. The public servants who promote and authorize… Read more »
Exactly right. The bondholders, too, are doing effectively the same thing by demanding securitized bonds that transfer full ownership of future revenue to them. Only stakeholder not playing this game is the taxpayer.